Tag: 340B Program

340B Drug Ceiling Prices Now Available

On April 1, 2019, the Health Resources and Services Administration (HRSA) launched a secure website that lists the maximum price drug manufacturers may charge 340B-covered entities for 340B-eligible drug purchases (the 340B Ceiling Price Site).  Drug manufacturers and 340B-covered entities may access the 340B Ceiling Price Site through their HRSA Office of Pharmacy Affairs information system (the 340B OPAIS) account here: https://340bopais.hrsa.gov/

Since the creation of the 340B program in 1992, participating covered entities could not verify whether they received the correct price for medication purchased through the program. In 2010, as part of the Patient Protection and Affordable Care Act, Congress directed HRSA to create a secure database that lists the 340B ceiling price.   Nearly nine years later, HRSA launched the 340B Ceiling Price Site which allows covered entities to now access verifiable 340B drug pricing information.

The 340B ceiling price is statutorily defined as a drug’s average manufacturer price (AMP) of a drug reduced by the unit rebate amount (URA).  The URA is calculated by dividing the drug’s Medicaid drug rebate amount (DRA) by the AMP.  The 340B ceiling price can be calculated as AMP – (DRA/AMP).

To populate the 340B Ceiling Price Site, HRSA obtains AMP and URA information from the Centers for Medicare and Medicaid Services (CMS), as well as a third-party drug pricing publisher, First Databank.   Manufacturers are also tasked with providing pricing information to HRSA during quarterly price reporting windows, which will last for two weeks each calendar quarter. If there is a discrepancy between HRSA’s data and manufacturer reported data, the manufacturer may either: (1) accept HRSA’s data as its own, (2) refuse to edit the manufacturer data and provide explanations for each discrepancy, or (3) edit the manufacturer data and provide reasoning for any remaining discrepancies.  After resolving pricing discrepancies, HRSA will publish the calculated 340B ceiling price to the 340B Ceiling Price Site.

Covered entities’ access to the 340B Ceiling Price Site is limited to the covered entity’s authorizing official (AO) and primary contact (PC).  AOs and PCs are strictly prohibited from sharing 340B pricing information outside of their organization and from exporting pricing information from the 340B Ceiling Price Site. They must attest to their compliance with these obligations each time they log into the 340B Ceiling Price Site.

Although the 340B Ceiling Price Site provides covered entities with valuable pricing information, covered entities are reminded that the price they pay for 340B-eligible drugs could differ from the 340B ceiling price depending upon the covered entity’s wholesale pricing contract terms. The price paid for 340B eligible medications may vary for a number of reasons, including wholesale cost-minus/plus calculations and the availability of sub-340B ceiling pricing for drugs through the 340B Prime Vendor Program.

 

© 2019 Dinsmore & Shohl LLP. All rights reserved.
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Health Resources and Services Administration (HRSA) Withdraws 340B Program Proposed Rule

Mcdermott Will Emery Law Firm

On November 14, 2014, the U.S. Department of Health and Human Services (HHS) Health Resources and Services Administration (HRSA) withdrew a proposed rule that would have provided guidance on a variety of topics related to the 340B Federal Drug Pricing Program.  The “mega rule,” which had been submitted to the White House Office of Management and Budget in April 2014, was expected to cover important 340B Program matters, such as patient eligibility, contract pharmacy arrangements, and eligibility for hospitals and off-site facilities.  Now, in lieu of the proposed rule, HRSA has announced its intention to release notice-and-comment guidance to “address key policy issues raised by various stakeholders committed to the integrity” of the 340B Program.  Additionally, HRSA plans to issue proposed rules related to civil monetary penalties for manufacturers, calculating the 340B ceiling price and administrative dispute resolution.

The decision to withdraw the proposed rule, coupled with HRSA’s intention to release regulatory guidance on similar issues, may be viewed as a response by HHS to a recent federal court decision limiting HHS’s ability to promulgate notice-and-comment rules.  In a May 23, 2014, decision, the U.S. District Court for the District of Columbia held that HHS did not have the requisite statutory authority to promulgate a notice-and-comment rule pertaining to the purchase of orphan drugs by certain Covered Entities.  Further, the withdrawal may indicate a decision by HRSA to scale back its issuance of notice-and-comment rules for the 340B Program, limiting formal rulemaking to areas where the statutory authority to do so is explicit.  The withdrawal of the proposed mega rule demonstrates HRSA’s position that it does not possess the broad authority necessary to issue a formal rule of this scope.

Without the proposed rule, important facets of the 340B Program remain uncertain.  Manufacturers and Covered Entities that sought guidance on key practical issues such as patient definition now must continue to wait for clarification.  As noted, going forward HRSA will seek to clarify “key policy issues” but has yet to announce whether the topics covered by the proposed rule will be addressed.  HRSA’s regulatory guidance on these issues may never come, however, if the U.S. District Court for the District of Columbia (which is hearing further briefing on the aforementioned case concerning HHS’s regulatory guidance on the orphan drug rule) further restricts HHS’s ability to issue guidance.

In the face of continuing uncertainty, 340B Program participants, including Covered Entities, should stay current and closely follow available guidance from HRSA and the 340B Prime Vendor (Apexus).  Until clear guidance has been issued pertaining to subjects such as patient definition and contract pharmacy compliance, 340B Program participants should continue to follow and document best practices to ensure compliance with all 340B Program requirements.

ARTICLE BY

David S. Ivill
Emily J. Cook
Joseph M. Parise
OF
McDermott Will & Emery

340B Drug Pricing Program Notices on Group Purchasing Organizations and Medicaid Exclusion File

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Following the recent release of new Program Notices regarding the Group Purchase Organization (GPO) prohibition and Medicaid Exclusion File, 340B participating entities should review their 340B program policies and procedures to ensure compliance with new and clarified guidance regarding GPO purchasing and dispensing of 340B drugs to Medicaid patients.

On February 7, 2013, the Health Resources and Services Administration Office of Pharmacy Affairs (OPA) issued new Program Notices related to the Group Purchasing Organization (GPO) prohibition and the Medicaid Exclusion File (the Program Notice).

GPO Prohibition 

Disproportionate Share Hospitals, children’s hospitals and freestanding cancer hospitals that participate in the 340B program are prohibited from purchasing “covered outpatient drugs” through a GPO or other group purchasing arrangement.  Covered outpatient drugs include most outpatient drugs obtained by written prescription, with the exception of vaccines and certain drugs classified as devices by the U.S. Food and Drug Administration.

Prior to the release of the new Program Notice, OPA had provided little guidance regarding the scope and enforcement of the GPO prohibition.  The Program Notice appears to have resulted from OPA concern that certain hospitals may have been routinely using outpatient GPO accounts when unable to purchase drugs at 340B prices.  With the Program Notice, OPA has now formally established policies regarding the application of the GPO prohibition to drug shortages, outpatient clinics and virtual inventory/replenishment purchasing models.

With the new Program Notice, and accompanying FAQs released subsequent to the publication of the Program Notice, OPA advises that the GPO prohibition applies even when a covered outpatient drug is not available at the 340B price due to a manufacturer shortage.  In such cases, hospitals are instructed to notify OPA of the issue, but may not obtain the drug through a GPO.

The Program Notice also provides that the GPO prohibition does not extend to certain off‑site outpatient clinics.  A hospital may use a GPO to purchase covered outpatient drugs for an off-site outpatient clinic if all of the following requirements are met:

Further, OPA establishes that a hospital may not use a GPO to purchase covered outpatient drugs for dispensing to patients through a contract pharmacy.  This guidance does not prohibit a contract pharmacy that is not owned by a hospital (which is the entity that would be subject to the GPO prohibition) from accessing GPO pricing through its own account, so long as the hospital is not involved in the pharmacy-GPO arrangement and does not benefit from the pharmacy’s GPO pricing.

  • The off-site outpatient clinic is located at a different physical address than the hospital
  • The off-site outpatient clinic is not registered in the OPA 340B database as participating in the 340B program
  • Covered outpatient drugs for the off-site outpatient clinic are purchased through a separate pharmacy wholesaler account than the hospital
  • The hospital maintains records demonstrating that drugs purchased through a GPO for the off-site outpatient clinic are not utilized by or transferred to the hospital or any off-site outpatient location registered in the OPA 340B database

Hospitals, including their outpatient sites, subject to the GPO prohibition must discontinue GPO purchasing of covered outpatient drugs before the first day of their respective 340B program eligibility, although each may continue to dispense previously purchased GPO inventory.  Those hospitals that maintain pharmacy inventory through a virtual inventory/replenishment model, in which 340B drugs are purchased based on prior dispensing to 340B-eligible patients, are also prohibited from using a GPO to purchase covered outpatient drugs.  OPA has advised that hospitals utilizing a replenishment model in “mixed use” (inpatient and outpatient) pharmacies must now account for (“accumulate”) dispensed drugs for inventory replenishment as either inpatient, 340B-eligible or outpatient non-340B.  Drugs accumulated for outpatient non-340B replenishment may only be purchased through a non-340B, non-GPO account.  In addition, a hospital may not purchase drugs on a 340B account until the 340B-eligible accumulator reaches a full package size and/or minimum order quantity.  The result is that such drugs typically must be purchased at wholesale acquisition cost (WAC) or prices individually negotiated between the hospital and manufacturer.

The new Program Notice advises that hospitals subject to the GPO prohibition that are found in violation of the prohibition may be immediately removed from the 340B program and subject to repayment to manufacturers for the period of non-compliance.  However, in a separate FAQ on the OPA website, OPA advises that it will not enforce the GPO prohibition until after April 7, 2013.  Those hospitals that are unable to meet the compliance deadline are advised to either notify OPA of non-compliance and submit a corrective action plan (such submissions will be handled on a case-by-case basis) or disenroll either the entire hospital or, if applicable, non-compliant off-campus locations, from the 340B program.

Medicaid Exclusion File

Drug manufacturers are not required to provide a 340B discount and Medicaid rebate on the same drug.  In order to prevent these “duplicate discounts,” OPA maintains the Medicaid Exclusion File.  This database lists all 340B participating entities (covered entities) and indicates whether the covered entity has elected to dispense 340B drugs to Medicaid patients (carve-in) or obtain drugs for Medicaid patients at non-340B pricing (carve-out).  Covered entities that have elected to carve-in are listed in the Medicaid Exclusion File by Medicaid billing number.

State Medicaid programs are instructed to access the Medicaid Exclusion File to ensure they do not seek manufacturer rebates from those covered entities that are listed in the database.  In the Program Notice, OPA reminds states to use the Medicaid Exclusion File to prevent duplicate discounts and to report any discrepancies between provider billing practices and the information in the database to OPA.

The Program Notice advises covered entities of a change in OPA policy regarding the timing of changes to a covered entity’s decision to carve-in or carve-out.  While changes previously could be made at any time, OPA will now only permit changes on a quarterly basis.  OPA also clarifies that a covered entity may choose to carve-in or carve-out for a subset of 340B enrolled locations, but if it does so, must obtain a separate Medicaid provider number for any eligible locations that carve-in.  Covered entities are also reminded that they must ensure their information is accurately reflected in the Medicaid Exclusion File and that they may be subject to manufacturer repayment if the database reflects that the covered entity opted to carve-out, but the covered entity has been dispensing 340B drugs to Medicaid patients.

Next Steps

340B participating hospitals subject to the GPO exclusion should review their current operations and policies and procedures to evaluate compliance with the guidance released in the new Program Notice and FAQs, with particular attention to use of GPO purchasing to obtain covered outpatient drugs that are not available at 340B pricing and for replenishment inventory.  As necessary, hospitals should cease purchasing covered outpatient drugs through a GPO and begin revising purchasing procedures to ensure compliance by April 8, 2013.

Hospitals should also evaluate current policies regarding use of GPOs at off-site outpatient clinics not registered in the OPA 340B database to determine whether such locations may be eligible to purchase covered outpatient drugs through a GPO.  Previously, many such off-site outpatient clinics were restricted to only purchasing at WAC pricing due to the GPO exclusion.  The new Program Notice makes clear that, so long as purchasing is conducted through a separate pharmacy wholesaler account (not the hospital’s), hospitals subject to the GPO exclusion can use a GPO to purchase drugs for off-campus outpatient clinics that are not registered in the OPA 340B database.  Therefore, outpatient sites now have the flexibility to purchase drugs through a GPO for those clinics that are not yet eligible for 340B enrollment (e.g., they have not yet appeared on a filed Medicare cost report) and to opt-out of enrolling off-site outpatient clinic sites if certain locations would see greater benefit from GPO purchasing than from 340B participation.  Further, hospitals may wish to explore opportunities for selective enrollment of off-site outpatient locations to ensure patient access to certain drugs, such as intravenous immunoglobulin, that have historically been difficult to obtain at 340B pricing and cost-prohibitive to obtain at WAC.

All covered entities should review their information in the Medicaid Exclusion File to ensure the database reflects current Medicaid billing practices and be aware that any changes will only be effective as of the next quarter beginning January 1, April 1, July 1 or October 1.  Covered entities should also use this opportunity to review state Medicaid program requirements regarding carve-in or carve-out restrictions and billing rules related to 340B drugs.

© 2013 McDermott Will & Emery